Dr Vino's wine blog

wine talk that goes down easy

One of my friends told me that he recently was looking to get three bottles of one Chateauneuf du Pape. He found it online for $47.99 at a store in New Jersey, coincidentally, near where his mother lives. So he called the store and asked them to hold three bottles for his mom to pick up. But when confirming the transaction, the clerk told him that the wine was $58 a bottle.

My friend replied that it was actually $48 on their web site. The clerk said that was a web-only price and the price via phone and in-store was actually $57.99.

So he hung up and placed the order on the web for in-store pick-up.

It wasn’t the first time he had encountered such a price spread. He also tried to buy a Pax syrah in NYC and found it online for a good price. Swinging by after work, he found the in-store price was $20 higher. The clerk shrugged when he mentioned the online/in-store difference, my friend had to buy the wine then and there so he did and says he will never buy wine from that store again.

Suggesting a similar situation, another friend said that he had heard of a guy who went into a wine store looking for a bottle that he had seen online for $17. But upon bringing it to the register, the price was $20 and the clerk refused to give the “internet” price again. So the guy left, went home, ordered online for $17, and picked up the wine in-store. Wow, such admirable dedication to low prices, but that guy (and my friend) really needed an iPhone.

Why should customers have to resort to smartphones to find the best deals in some wine stores? In part, it’s a testimony to the price-leveling power of google and wine-specific search tools such as wine-searcher.com. (Full disclosure: I make a tiny amount of money–pennies, literally–as an affiliate of wine-searcher.com.) The site searches the online inventory of almost 10,000 wine stores worldwide. The default display is sorted by price, from lowest to highest. So when a store makes a commitment to maintaining an online inventory, they have an incentive to offer a low price to appear on the first page of results of a search for a given wine. In store customers might not be so price savvy.

And what of daily emails from wine retailers? I subscribe to some, but generally I find them a blunt instrument, blasting out offers on wines that I have no interest in. But I may give them a closer look since I learned that some retailers use these blasts to offer deals that are particularly attractive, indeed, too hot even to be listed online. Maybe I will take off some of those spam blocks I had set up…

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on Monday, June 29th, 2009 at 10:50 am and is filed under wine shops, wine technology.
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Could the main culprit in this phenomena be some people’s reliance on points to buy their wines? Many new wine stores have been opened by people with zero wine experience because they can simply follow the formula of buying wines based on critics points and setting a price that brings people in. Many established stores follow the same model. It becomes a battle for who can survive on the lowest margin.

While it may seem unfair to offer different prices on-line and in-store, as you say, it is a strategy that differentiates between knowledgeable price-shoppers who consult wine-searcher, vinquire, etc. and walk-ins who may just be picking up a bottle, unaware of what the “market price” may be.

In my experience, when asked, most shops will match a competitor’s on-line price (within reason), and certainly their own. It would be foolish not to, and risk losing a customer.

Recently, I experienced both results on one shopping trip. When a 20% off on-line offer didn’t come up on check-out, I asked for the manager, who did the right thing and gave me the discount. Unfortunately, I also bought a wine they were pouring at an in-store tasting. When I got home, I found it 33% lower at a number of local shops listed on Wine-Searcher. An email to the store has gone unanswered, and, as a result, I will not shop there again.

I haven’t had this experience with wine yet, but encountered it trying to purchase wireless handsets at Circuit City. The price online was an easy $50 below the in-store price. I asked an employee about it and he told me they couldn’t beat the online price in-store, and then he told me my best bet was to go home and order it for in-store pick-up. Kudos to the employee for suggesting that, but I took it one step further by going to their computer department, finding a PC that was online and placed my order right from the store. A few minutes later I went back to the same employee and gave him my order number and had my handsets at the online price.

What I think is a travesty is the shipping cost when the advertised on-line price is a big big sale and then they want to charge you $30 for shipping. But, of course, if you order over $200 worth of wine, they will ship it for free. However, the big travesty is that if you live in Manhattan delivery is free–you live in the Bronx and the sale is no sale at all.

These retailers are trying to be savvy by segmenting markets, but they’re being clumsy. It makes sense to offer different prices through different channels, to try to drum up business and sell the most merchandise. The discount to web buyers makes sense in that you’re rewarding high-information consumers. If someone comes in and QUOTES the web price, they’re obviously high-information consumers, and should be given that price. But the low-information consumer who just browses in the store and decides to buy something on a whim… there’s nothing wrong with charging them whatever the market will bear.

The problem lies in refusing to honor the lower price, not in having two prices in the first place.

Good article. I think this illustrates one more way in which the internet aggregators are driving down prices and thus margins for retailers and wineries. Since it’s apparently legal online to offer limited product to the highest bidder, I suppose you could also have a store decide not to sell it to you for the online price because someone is willing to buy that same bottle of wine for more. All whining about the unfairness aside, that’s what’s going on. In many cases, the “store” online with the lowest price doesn’t actually have the wine in stock and if they do, are making a very small markup on them.

Good stuff, Tyler. Put us in the camp of offering our best prices via email, while our online and retail prices are the same. Our email list is like our “locals” so we try to give our “locals” the best price.

I’m sure there are some things that make wine different, but as one commenter already mentioned, this phenonmenon is not limited to wine. Everything from electronics to books to clothing have a different price if you buy them online (from the same retailer). This doesn’t make it right — just not unique to wine. One difference may be that the scenarios you detail here seem to involve independently owned establishments, which seem foolish not to honor their own online prices. In contrast, I do not expect the same from Borders or Banana Republic — but perhaps I should?

>And what of daily emails from wine retailers?
>I subscribe to some, but generally I find
>them a blunt instrument, blasting out offers
>on wines that I have no interest in.

I encourage EVERYONE to try and actually buy some of those “deals”. When you try and click thru and put 90% of those deal wines in your shopping cart, you’re told “Sorry, that wine is out of stock. However, the following 5 wines are in stock”. Classic bait and switch.

Internet retailers have no idea what you like, even if you fill out their ‘profile’ questions. We talk to people about what they like and how they want to get it. That’s why our business has absolutely exploded, even in the face of the worst economy in recent history. It’s also helped us become the fastest growing company in Sonoma County. Selling and enjoying wine is a viceral experience, not electronic…

I honestly don’t know how it works for more casual purchasers, but for me I scan all mediums and buy selectively to get the most bang for my buck. Online, email, auction, and ever-more-rarely retail. On top of generally being more expensive, the retail option generally means that the wine has been sitting at room temperature for who knows how long.

[…] hundreds of good wine sellers marketing very good wine at, until now, unheard of prices. In a Dr. Vino post , where you can feel the frustrations rooted in inconsistent on-line and in-store pricing from […]

It’s nothing new. What is ridiculous is the hoops they put your friends through when they were aware of the online price. It’s one thing if the shopper just walks in casually, unknowing. However, they had their information on hand and yes, a smart phone would’ve saved them even more time in that situation.

“On top of generally being more expensive, the retail option generally means that the wine has been sitting at room temperature for who knows how long.”

On the other hand, you can inspect the bottle right then and there for signs of damage. Don’t assume distributor’s warehouses are climate-controlled; often they are pallets and pallets of wine stacked on top of each other, and the bottles on top can be significantly warmer than those on bottom.

The online vs. in-store differentials are definitely a tricky proposition.

Not long ago, I helped create a website for online sales for one of the largest wine retailers in the county, and even though the web is less than 5 percent of all wine sales, I still believe it is the wave of the future. Wine purchasers love finding deals on the internet and appreciate the convenience it offers, especially if they have children or are busy two income families. That’s a big reason why many bricks-and-mortar retailers are building websites. They want to give flexibility to their consumers, and websites with great specials and great content will be an increasingly formidable force in overall national retail wine sales.

But there’s definitely an argument to be made for the value of in-store wine sales. Consumers purchase wine for three reasons: great prices, great product selection and superior customer service. Most consumers don’t purchase wine on the internet because they like the experience of visiting stores to interact with their retailer and participate in a treasure hunt experience, browsing and finding hidden gems. It’s also important to get to know the owner or wine salesman of your local store — they can give great recommendations and let you know when they have specials or access to limited distribution wines.

My (perhaps incorrect) understanding of *New York State* Liquor Law is that offering two different prices based on purchase channel is actually illegal.

I’ve been told on a number of occasions that the price must be the price, regardless of whether someone walks in, calls, faxes, uses the web, or drops off an order via carrier pigeon.

A store is clearly allowed to offer quantity discounts, but again, those must be consistent across channels.

Does anyone with a bit better access to the law confirm whether this is true?

Regardless of whether my comments above are correct, this is how we operate at Crush: the price is the price is the price no matter how you place your order. Note: We *do* time-restrict our promotional offers for obvious reasons — the price in March may not be the price in June.

I have seen this practice used and frankly have issues in both directions. The internet buyer that we see is generally a wine poacher or only interested in the wines that are highly rated but are not found at their local shop. So they want a fantastic deal and are not happy when it’s basically at full retail.
I do not agree with an internet price and a in-store price that is different. We may from time to time put a coupon in that requires you the shopper to bring it in to get the price. Having the customer come into the shop is what I want as the owner because they may see another bottle that they would like and buy it . Or, they may actually realize how nice a store we have and we may develop a new customer.

We may negotiate a price with a customer who is in the store and wants the wine but would like a little deal on it. If you are a customer and support us we support you in these tough economic times. The internet shopper is a secondary customer to us. We sell to them but they want Sine Qua Non, or Peter Michael at a discount. We want those wines to be sold to our customers who come back day in and day out and enjoy our love, knowledge and interest in wines that they are buying.